Capitalism versus cronyism

There is one place where the Tea Party and the “occupy” movement are often said to overlap, and that is in their attitude toward Wall Street. The result is not the same, however. Tea Party members, in general, don’t like folks gaming the system — and buying government favoritism.  For example, Wall Street and executives are top-tier contributors to the Obama campaign, and this was especially true in 2008. As much as Obama hypes his class-warfare rhetoric, even now openly using the term, the big players on Wall Street know that this is for show. The rules (and now, executive orders) will favor them, as did the supposed “crackdown” on Wall Street of 2009/2010.

An interesting tidbit: Bain executives preferred supporting Obama to Romney, perhaps because Romney actually knows how the game is played and seemed determined to do something about it. I don’t see Bain as evil, but I understand their self-interest.

This is cronyism. It is a problem because of the existence of a market for favors — a market created by the sellers (i.e., those in power in the government). It is not entirely a Democrat problem; it tends to corrupt most people who are exposed to it.  Even those with large amounts of money — the John Kerry/Rockefeller/Kennedy types — get seduced by the power of their positions.  It takes great character to resist the lure of cronyism, but the Tea Party believes that  we must elect people of great character and restore the proper activity of capitalism, the free enterprise process vital to our country. I agree.

That’s the difference: The “occupy” folks want to get rid of capitalism entirely, where as the Tea Party takes aim at cronyism.  This is an important distinction.

Cronyism arises when government wades into the world of free enterprise and regulates it in such a way that the buying of favors, and picking of winners, becomes a way of life for some. In its own perverse way, this is a market as well, but a corrupt one. As a friend of mine puts it who does business in South America: “They get in the way so that you must pay them to get out of the way.”

To a certain extent, once government has done this you have no choice but to play the game to some degree. This can be done relatively cleanly, but the game itself is the problem and is a creation of the government-created cronyist system. Bain is involved in the game, but plays it fairly straight from what I can tell (compared to, say, Goldman Sachs). Far better to get the government’s nose out of the trough entirely. The lobbyist system will then shrivel to a fraction of its current size — as there would be no profit in it.

In a capitalist/free enterprise system, the market decides the value of your contribution, not lobbyists.

===|===========/ Keith DeHavelle